Conduent, Inc. (CNDT) Accused of Inflating Revenue and Growth

According to the complaint against the company for alleged violations of the Securities and Exchange Act of 1934 between February 21, 2018 and November 6, 2018, Conduent, Inc. (CNDT) was formed in December 2016 from a collection of businesses within the Xerox Corporation. In 2017, Conduent acknowledged that it was a disparate company and needed to go through a transformation period. By February 2018, Conduent represented that it had exited the transformation phase and had cured inefficiencies caused by operating on multiple information resource platforms. However, just a few months later, Conduent released negative third quarter results and lowered its FY18 revenue guidance. Management blamed the lowered outlook on the “continued suboptimal performance from an inherited legacy technology vendor” and on an “outdated and historically under-invested legacy IT infrastructure has caused major disruption”. On this news, Conduent’s stock fell almost 30% to $13.92 per share on November 7, 2018, and has yet to recover.

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